Surat diamond units hit hard by attrition

Ahmedabad: Diamonds may be forever but workers in Surat seem to prefer cloth over the precious stone.

Over the past year, the city’s diamond polishing units, which work on 10 out of every 12 roughs (or rough diamonds) polished in the world, have lost between 25% and 30% of their workers to embroidery units set up by textile firms wishing to stay relevant in a market inundated with Chinese cloth that is 40-50% cheaper than their output.

The diamond industry, which earned Rs80,000 crore in export revenue last year, has been hit hard by the attrition. The competitiveness of India’s diamond polishing units is already threatened by a move by some African countries to levy a tax on the export of rough diamonds in an effort to encourage companies to set up local units, and by a proposal by the US to impose a 4% duty on jewellery exports from India.

Experts say that as a result of this, exports of diamonds from India in 2007-08 could stay at the same level as in 2006-07 or, worse, decline.

The diamond industry in Surat employs around 700,000 people.

“These skilled workers are difficult to replace. This, coupled with other factors such as the proposed levy by African governments and the US as well as the rise of the rupee against the dollar, could lead to a fall in diamond exports,” said Pravin Nanavaty, a diamond trader in Surat and an official of the Gujarat Hira Bourse, an association of diamond traders.

The city’s diamond units have been a happy hunting ground for any new industry that comes up in Surat. Polishers have excellent hand-eye coordination and are trained to work on intricate designs. Embroidery units do not require very skilled workers—the embroidering itself is done primarily on machines. What these units do need is a large number of workers to operate the machines.

According to the head of the local textile industry association, embroidery units also offer a better work environment and higher salaries than diamond polishing ones.

“A typical embroidery unit is air-conditioned, well lit and the worker does not keep sitting for long hours. Moreover, a diamond worker gets only Rs100-200 per day in the beginning with no guarantee of getting work every day of the month. In embroidery units, they work on contract and earn anywhere between Rs7,000 and Rs8,000 per month initially. An experienced worker can earn up to Rs25,000,” said Devkishan Maghnani, acting president of the Federation of Surat Textiles Traders Association and Surat Textile Manufacturers Consortium.

Surat’s textile firms have only recently diversified into embroidery. The city has over 500,000 looms and its textile mills produce 25 million metres of cloth every day; the industry is estimated to be worth Rs25,000 crore. However, cheaper Chinese imports have hurt the mills.

In 2005, the textile firms began setting up embroidery units in an attempt to add value to their output. Two years ago, there were a few hundred embroidery machines in the city. Their number has since risen to 33,000.

These units work on 45% of the cloth produced by the city’s mills, and export to several countries including the United Arab Emirates, Iran, Afghanistan, Bangladesh and Pakistan.

The diamond industry has not yet taken any significant steps to retain employees.

“Our profitability is definitely under pressure due to the churn but there are other problems that we are tackling now,” said Kishore Maldar, a diamond trader.

Maldar is among 70-odd wholesale diamond merchants who source diamonds from De Beers, one of world’s biggest diamond exploration, mining and trading firms, and supply to local units.

These wholesale traders buy from De Beers under a licence that is currently due for renewal; they constitute a crucial link between companies such as De Beers and the thousands of small polishing units in Surat.

Maldar said the renewal process would take around two months. “The dollar, too, is weakening against the rupee, affecting our export earnings, and there is a shortage of roughs (in the market). All these are keeping us busy and we have not been able to focus on the labour issue,” added Maldar.